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In a big win for generic drug manufacturers, a federal judge has invalidated the patents for Imodium A-D — a popular, over-the-counter diarrhea medicine — after finding that the patented improvements to the drug were “obvious” and were added only to thwart competition because the original patent on the drug’s active ingredient was about to expire. In a harshly critical 34-page opinion in McNeil-PPC Inc. v. L. Perrigo Co., U.S. District Judge Berle M. Schiller of the Eastern District of Pennsylvania found that McNeil’s efforts to secure additional patents was, in actuality, “a scheme for extending the life of a drug about to go off patent, and McNeil executed this scheme without the slightest regard for the intent and purposes of the patent laws. Indeed, McNeil’s sole motive was to compromise these statutes and constitutional protections for the sake of profits.” Citing McNeil for bad faith and improper motives, Schiller declared the case an exceptional one that called for an award of attorney fees to reimburse generic manufacturer L. Perrigo Co. “Particularly during the prosecution of the patents in suit, McNeil’s conduct was careless, irresponsible, and, at the very least, tantamount to studied and deceptive ignorance,” Schiller wrote. “McNeil’s repeated erroneous representations, failure to disclose relevant prior art, and overall persistence in prosecuting exceedingly obvious ‘inventions’ make this case exceptional,” Schiller wrote. At issue in the suit were four patents covering Imodium A-D. The first two patents related to the addition of simethicone, an anti-flatulence drug; two later patents related to modifications to the design of the pill that prevented the simethicone from interfering with the effectiveness of the anti-diarrheal agent, loperamide. Schiller found that McNeil secured the patents by falsely claiming that the inventor of the first two patents had discovered the concurrence of diarrhea and flatulence, when, in fact, the medical world had long ago noted the phenomenon. As a result, Schiller found that the two patents were “invalid for obviousness” since the addition of an anti-flatulence agent was an obvious improvement that had already been done in other combinations. In his closing paragraphs, Schiller chided McNeil’s lawyers for pursuing a patent infringement case. “Patent lawyers are called upon to play the roles of chemists, engineers, physicians, and physicists — now, they are also asked to be magicians. That is, patent lawyers are asked to defend — with smoke and incantations when necessary — business-driven decisions having nothing to do with inventing or discovering anything,” Schiller wrote. “Consistent with schemes to prolong the legally-protected period of exclusivity, companies hire highly talented attorneys to perform acts of legal legerdemain in order to make modest developments look and feel like inventions, when in reality the purported discovery is nothing more than a creation of an advertising and marketing department.” Schiller closed with a word of warning: “In-house counsel should be cautioned that complicity in patent prosecution for unsanctioned legal purposes may give rise in the future to review of that behavior by the appropriate attorney disciplinary machinery. Advancing a client’s economic interests is not a license to forget one’s ethical responsibilities.” McNeil, a subsidiary of Johnson & Johnson, is one of the leading manufacturers of over-the-counter pharmaceuticals, including Tylenol and Motrin. During the 1980s, loperamide became the best-selling prescription antidiarrheal in the United States. In March 1988, McNeil began selling loperamide over-the-counter under the brand name Imodium A-D. But Schiller found that, with a January 1990 expiration date for the basic loperamide patent fast approaching, McNeil instructed one of its scientists to develop a new patent-protected form of loperamide. The scientist developed a drug that combined loperamide with simethicone, and his resulting patent application, along with continuation applications, led to the issuance of the two patents. At first, McNeil marketed the combination drug as the Imodium Advanced chewable tablet. But during development, Schiller found, McNeil researchers became concerned that over time the simethicone interacted negatively with the loperamide, limiting the drug’s shelf life. To cure the problem, another McNeil scientist developed an impermeable polymeric barrier separating the simethicone from the loperamide that led to two more patents. After the basic loperamide patent expired in the late 1980s, Perrigo began marketing a store brand loperamide product similar to McNeil’s Imodium-A-D tablet. When McNeil introduced the Imodium Advanced combination drug, Perrigo became interested in developing a loperamide-simethicone product in order to better compete in the antidiarrheal market. With sales exceeding $800 million per year, Perrigo is the world’s largest manufacturer of store brand, or generic, pharmaceutical products. Major retail chains such as Wal-Mart, Rite-Aid, and CVS sell Perrigo’s products under their stores’ respective labels, generally at prices 30 to 40 percent less than the national brand products. In November 2000, Perrigo filed an abbreviated new drug application with the FDA seeking the approval of a loperamide-simethicone combination tablet. It also notified McNeil that it considered its new product to be legal since its lawyers had determined that the four recent McNeil patents were invalid. McNeil responded by filing suit in U.S. District Court. Now Schiller has declared all four patents invalid and ordered McNeil to reimburse Perrigo for the attorney fees it spent defending the suit. Schiller criticized McNeil for making “a number of erroneous representations” to the Patent and Trademark Office, including the claim that its scientist had discovered the concurrence of diarrhea and flatulence. “More than 20 prior art articles and publications noted the concurrence of diarrhea and gas-related symptoms,” Schiller wrote. McNeil’s lawyers insisted that the patents were valid since the drug combination had “unexpected results” or “synergy.” By adding an anti-flatulence agent, McNeil said, the drug offered enhanced diarrhea relief, including faster relief in the critical first 12 hours, and also provided unexpectedly enhanced gas relief. But Schiller found that there were “problems with the underlying studies” that McNeil cited. Since diarrhea is a “self-limiting disease” that often “goes away on its own, without any treatment” Schiller found that “the amelioration of symptoms may be due to pharmaceutical treatment or the mere passage of time.” As a result, Schiller said he rejected “McNeil’s sweeping assertions that the clinical studies show unexpected results and synergy that are not merely statistically significant, but biologically and medically significant as well.” McNeil also pointed to the commercial success of Imodium A-D as proof that the drug filled a new niche on the pharmacy shelf. Schiller disagreed, saying the high sales figures were “the calculated result of an aggressive marketing campaign of unprecedented scope in the antidiarrheal market.” McNeil’s motive, Schiller found, was to sway the market away from its original product by creating a demand for the patent-protected combination drug. “McNeil’s marketing expenditures appear to be consistent with an overall strategy for stymieing generic competition. By heavily promoting the combination product, McNeil can in effect transfer sales from the non-patent-protected loperamide product to its combination drug,” Schiller wrote. Even if the combination drug failed to gain patent protection, Schiller found that it still enjoyed “a significant period of exclusivity” due to provisions of the Hatch-Waxman Act. And since loperamide alone is now sold in generic form, Schiller found that McNeil benefits from the transference of sales from the loperamide-alone product to its combination drug.” McNeil was represented by attorneys Steven R. Trybus, Harry J. Roper, George S. Bosy, Sarah L. Taylor, Aaron A. Barlow, Greg D. Bonfield, Timothy J. Baron and Eric L. Lohrenz of Roper & Quigg in Chicago, along with Dianne Brown Elderkin, Thomas D. Smith and Gwilym J.O. Attwell of Woodcock Washburn in Philadelphia as local counsel. Perrigo was represented by Douglas H. Siegel, James A. Mitchell, Steven L. Underwood and Richena Y. Brown of Price Heneveld Cooper DeWitt & Litton in Grand Rapids, Mich., along with Thomas Finarelli of Lavin Coleman O’Neil Ricci Finarelli & Gray in Philadelphia as local counsel.

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